UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that the Oil and Gas Authority has approved the Horse Hill Field Development Plan and consented to the start of long-term production ("Production") from the field.
This key consent will enable net recoverable reserves to be allocated to the Company, a pre-requisite for future potential debt-based funding. It will also permit the Company to enter into long-term field operations contracts which can help reduce operating costs below $19 per barrel, making the field more profitable even at current low oil prices.
Portland oil pool Production will commence via Horse Hill-1 ("HH-1"), with Kimmeridge Production planned to be added in late spring via a conversion of the well to a dual completion. Production from HH-2z is planned to follow upon completion of the current extended well testing campaign.
UKOG holds a controlling 85.635% interest in the Horse Hill oil field and surrounding highly prospective PEDL137 and PEDL246 licences, which are operated by UKOG's subsidiary company, Horse Hill Developments Ltd.
Stephen Sanderson, UKOG's Chief Executive, commented:
"This is an important regulatory milestone, granting governmental Production consent. The Company can now focus firmly upon maximising stable production, reducing operating costs and generating positive cash flow. The ability to book reserves also opens the way to potential debt funding, a positive step towards both creation and preservation of shareholder value."